Louisiana shifts coverage of state employee health plans

In a controversial move, Governor Bobby Jindal of Louisiana made the decision on Friday to shift the control of state employee health plans away from the Office of Group Benefits (OGB) and into the hands of private health insurer Blue Cross, Blue Shield, according to The Advocate.

The move, according to the OGB and Jindal's administration, will save the state of Louisiana $20 million a year. The shift will mean that 177 of the OGB's 327 employees will be let go.

Furthermore, the move will save money for state employees, according to Jindal's office. Following the shift, employees will pay $10 million less in 2012 and $19.5 million less in 2013 for standard health insurance rates and premiums.

Jindal's administration chose Blue Cross, Blue Shield out of three private insurers because of the cost-efficiency, according to The Advocate. Blue Cross, Blue Shield will receive $37.8 million a year to serve as an administrator. The other two companies vying for the position, United Healthcare and Humana, wanted $40.3 million and $49.1 million respectively.

United is ready to stand up and fight for the lost position, according to the Advocate. Earlier this week, United's press office released a 15-page protest accusing the OGB of "bending over backwards" to let Blue Cross in the door.

During these tough financial times when every dollar should count, it is inconceivable that the OGB would fail to scrutinize proposals closely to maximize the bargain it can strike for state taxpayers, United said in the statement.

In order to make a formal protest, United must first go to OGB Chief Executive Officer Charles Calvi Jr. If he denies the appeal, the company will move on to Commissioner of Administration Paul Rainwater. The final option would be pursuing a court challenge of the decision.

More than 200,000 state employees and family members in Louisiana stand to be affected by this change.